HILLSBORO CORPORATION AND ITS OWNER PLEAD GUILTY TO CRIMINAL ANTITRUST AND RACKETEERING CHARGES

July 29, 2011

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Antitrust charges against S&S Drywall and its owner, Steve Nagy, stem from rigging the bid process on a $24 million condominium project in Portland's Pearl District

Attorney General John Kroger today announced the guilty plea and sentencing of a Hillsboro contractor and his corporation, S&S Drywall Assemblies, Inc., on antitrust and racketeering charges. This case is the first state criminal prosecution for antitrust violations in the history of Oregon.

Stephen Gregory Nagy (DOB: 08/24/61) pleaded guilty this morning in Washington County Circuit Court to Criminal Antitrust, Racketeering and Felon in Possession of a Firearm charges. He was sentenced to 30 days in jail and five years of supervised probation. S&S Drywall Assemblies was ordered dissolved.

The Oregon Department of Justice worked closely with the Worker's Compensation Division of the Department of Consumer and Business Services on the 18-month investigation leading up to today's sentencing. The Division is responsible for ensuring that Oregon employers comply with wage and hour laws as they apply to worker's compensation.

"The Department of Justice is committed to investigating and prosecuting complex racketeering and antitrust schemes that disrupt fair competition in Oregon's marketplace and rip off state agencies," said Attorney General Kroger. "I would like to thank the Department of Consumer and Business Services and the Hillsboro Police Department for their valuable contributions to this case."

As part of his sentence Nagy will forfeit more than $50,000 in cash and more than $250,000 worth of assets to the state. He will be stripped of his license with the Oregon Construction Contractors Board and is not permitted to reapply for 20 years.

In addition, Nagy is prohibited from working for any "family operated" business within the next 20 years and may not seek employment in the construction industry unless he discloses these convictions to future employers. Nagy must also repay state agencies defrauded by his illegal activity, including the Employment Department, to which he currently owes in excess of $100,000. That figure is expected to rise.

The antitrust charges against Nagy derive from rigging the bid process that awarded S&S Drywall a $1.2 million project associated with the development of a $24,000,000 condominium structure in Portland's Pearl District. Nagy also engaged in a pattern of racketeering activity in which he bilked the state of hundreds of thousands of dollars. In particular, the charges focus on a scheme to fraudulently induce the Oregon Employment Department to issue unemployment benefits to S&S Drywall employees and forcing workers on prevailing wage jobs to return large percentages of their paychecks to him.

The weapons charges against Nagy stem from a raid on his residence, during which agents seized more than 20 powerful, high-end firearms. As a convicted felon, he is prohibited from possessing or controlling even one firearm. The Hillsboro Police Department provided important assistance on the day the search warrants were executed.

Attorney General John Kroger leads the Oregon Department of Justice. The Department's mission is to fight crime and fraud, protect the environment, improve child welfare, promote a positive business climate, and defend the rights of all Oregonians.